The Addendum Nobody Read: Bid Mistake and Withdrawal
You are bidding a 60,000 sf single-story medical office building as a lump sum. Two weeks before bid day, Addendum 3 raises the slab from 5 inches to 6 inches over 8 inches of base and adds 4,000 sf of mezzanine framing. Your chief estimator, working from the pre-addendum set, prices neither change. You carry a $180,000 "site utilities - allow" line as a lump sum inside an otherwise unit-priced schedule of values. Your bid of $8.42M is 4% under the next competitor and you are the apparent low bidder. Two days after the bid opening your estimator finds a $310,000 omission: the mezzanine framing plus the added rebar. You posted 5% bid security of $421,000. The owner wants the contract signed Friday.
1. Can you withdraw the bid, or must you sign? Analyze the mistake.
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The distinction that decides it: was this a clerical mistake or an error in judgment?
- Clerical/transcription errors - a decimal point, a transposed quantity, a line omitted from the recap - are the classic ground for rescission, provided the mistake is material and the other party had no reason to rely on it being correct.
- Errors in judgment - failing to read an addendum, estimating productivity wrong, missing a system entirely - are almost universally not relief grounds. The bidder owns its own estimating process.
Here you have a mixed case. Missing the addendum is squarely a judgment/process failure. The rebar quantity error may be clerical if the takeoff shows the quantity and the recap dropped it - go find out which it is before you call the lawyer, because the answer changes the strategy.
Factors a court or agency weighs: the magnitude of the error relative to bid size ($310,000 on $8.42M is about 3.7% - material but not absurd); whether the bid was unconscionably low; whether the error was palpable on the face of the bid (was it 15% under the field, or 4%?); whether the owner has changed position in reliance; and prompt notice.
Your facts cut against you: being only 4% under the next bidder means the error was not apparent on the face of the bid - the owner had no duty to inquire, which weakens a "mutual mistake" theory. Notice two days after opening is prompt, which helps.
Bottom line: you probably cannot walk away free, and you certainly cannot if the only defect is the unread addendum.
2. Assume you must perform. How do you recover the $310,000, and what does the bid security mean here?
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Bid security: 5% of $8.42M is $421,000. If you refuse to sign, the owner's remedy is generally to keep the security - for $421,000 to save $310,000 is a losing trade, and they may also pursue the difference to the next bidder. So the security tilts the analysis toward performing.
Recovery paths, in order of realistic value:
- Value engineering before signing. Offer the owner an equivalent-cost substitution: reduce the mezzanine to a lighter steel/joist system, revise the slab mix and reinforcement to a design that meets 6-inch performance with less steel, or re-sequence to save general conditions. A $200,000 recovery through VE is better than a $310,000 claim you lose.
- Preserve the change-order channel. The added slab depth and mezzanine are in the contract documents via the addendum, so you cannot claim them as extra - you swallowed them at bid. Do not waste credibility trying.
- Look for genuine scope gaps. If the addendum language is ambiguous as to whether the 4,000 sf is structural framing or just a slab edge, an RFI before contract execution can convert ambiguity into a clarified quantity - and a clarified quantity is negotiable.
- Read the unit-price schedule carefully. Confirm the base scope items are not also underpriced in a way that lets a quantity variation bail you out. If actual quantities exceed estimated quantities by more than the contract's variation threshold, a unit-price adjustment may be available.
What not to do: sign, then claim a mistake. Once you sign, you have warranted that you examined the documents; the claim dies.
3. You also have a $180,000 "allow" in an otherwise unit-priced schedule of values. Is that a problem, and how should you handle it?
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Yes - it is both a commercial and an integrity problem.
Why it matters:
- It is not an allowance unless the contract makes it one. An owner-controlled allowance has defined rules (documented reconciliation, owner approval of expenditures, unused funds returned). A bidder-invented "allow" is just a thin estimate disguised as a placeholder, and disputes over it will be resolved against the party that wrote it.
- It creates an unbalanced-bid suspicion. A lump sum buried in a unit-price schedule can be front-loaded or back-loaded. If the $180,000 is genuinely low relative to the work, you will be doing the work at a loss and will be tempted to claim it as a changed condition - which you will lose, because you wrote the number.
- It distorts the schedule of values used for progress payments, which can look like overbilling later.
How to handle it now:
- Convert it to a scope-based number before signing. Do a real takeoff of the site utilities: pipe lengths by size and material, trench depths, structures, tie-ins. Even a rough quantity × unit price is defensible; a round allowance is not.
- If it stays lumpy, disclose it. "Site utilities are priced as a lump sum based on the drawings dated X; if the utility plan is revised, we will price the change by unit rate." Written into the contract, this converts a weak spot into a defined boundary.
- Fix the schedule of values so the utility line is broken out by segment and can be billed against installed quantities.
Judgment: an "allow" you invented is an admission that you did not estimate the work. Either estimate it or define its boundary in writing.